How many of you know about the non-interest bearing loan ? This form of financing, in fact, is little known, as well as not widespread in our country. This is a loan that takes place between 2 private entities and that does not involve the payment of interest, but only the capital disbursed.
The non-interest bearing loan often takes place between relatives, family members or close friends but, despite this, it requires some precautions in managing everything to avoid problems with the taxman. Below you will find all the details and some important tips that you can put in place to protect yourself.
How the non-interest bearing loan works
As we have said, the non-interest bearing loan is a loan between 2 private entities and does not contemplate the payment of interest of any kind, much less the payment of opening and management costs as commonly happens with a credit institution. For this reason, these loans usually take place between relatives or friends.
Recently, however, a small problem has arisen due to the checks carried out by the tax authorities to find out any black payments or, even worse, recycling. Obviously the law protects and disciplines the non-interest bearing loan and, consequently, there is no need to be afraid.
What is important, but we will see it in more detail later, is being able to track and justify the movements of money. Having said this, it should be underlined that the non-interest bearing loan between private individuals should always be regulated by a private agreement which dictates the conditions with which both parties must comply.
This is also to avoid problems that, beyond what one might think, can also arise between relatives or close friends.
How to track money
To always be covered in the event of a possible tax check it is good that the money is tracked and that it is marked as a non-interest bearing loan. Yes, but how can we be sure that we don’t run into problems of any kind?
First of all, it is essential to trace the passage of money. The safest and most transparent way is by bank transfer. In this case, it will be sufficient to cause the wording “Non-interest bearing loan in favor of” as a reason. Alternatively, a postal or bank check or any other instrument that can be traced can be used. But this is not enough. You must also make a private writing.
The private agreement must contain all the information relating to the non-interest bearing loan :
- loaned amount;
- money transfer methods (example: bank transfer);
- refund method;
- any other agreements between the parties;
Private writing can be registered with the Inland Revenue or it can be enveloped and sent to yourself by registered letter. Both solutions are valid in order to make the date official and guaranteed in the event of any tax assessments and disputes.
All these procedures must not frighten anyone interested in the non-interest bearing loan. This form of financing, in fact, represents a very useful solution because it allows you to avoid all the problems related to the request for financing in the bank but, at the same time, requires small measures to avoid that future assessments of the revenue agency can create problems difficult solvable.
By doing everything in a transparent and traceable way, the non-interest bearing loan is a quick, simple to use and very effective tool to take advantage of a loan from a relative or friend.
How the interest-free loan works between individuals
This form of financing differs from all the others because it is a simple form of help between 2 private entities which, in some way, is closer to the “donation” than to the actual personal loan. Unlike the donation, of course, the non-interest bearing loan provides that the sum of money disbursed will still be returned even if it does not contain the interest share.
In case of doubts, doubts or to avoid future problems, it is possible to consult, in advance, the revenue agency so that you can receive an “official” opinion on the methods to be implemented in your specific case.